Q: Are class action lawsuit proceeds subject to inheritance tax?
The decedent died and taxes were paid some time ago, but we are still waiting for the proceeds from the class action. I know it won’t be much at all. Even if it’s a couple dollars, would we have to reopen and amend the inheritance tax that has already been paid?
A:
Every asset to which the decedent/Estate is entitled, or outright owns, must be valued and included in the Estate for purposes of taxation and distribution.
An expected benefit from a class action suit, if the decedent was but one of a large class, will probably be disappointing. In my experience, class action lawyers persuade assigned judges to approve millions in attorneys fee when the distribution to each member of the class may be worth about five bucks.
Have your probate lawyer look into the class benefit to be expected.
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